A free trade agreement between the EU and Mercosur, the South American trade bloc, has been welcomed by the European Automobile Manufacturers’ Association (ACEA).
Mercosur is a market of approximately 270m people, where 3.3m new cars were sold last year. The EU exported 73,000 cars to the region in 2018, representing 2.2% of the total market. By contrast, some 234,000 cars were imported into Mercosur from other countries, accounting for almost 8% of the market.
“Under the right conditions there is a real potential for growth for the EU auto industry, given the dimension of the Mercosur market, both in terms of population and GDP,” said ACEA secretary general, Erik Jonnaert.
ACEA represents 15 major Europe-based car, van, truck and bus manufacturers, including BMW Group, DAF Trucks, Daimler, and Fiat Chrysler Automobiles. The ACEA has stated its belief that through the EU-Mercosur deals benefits can be gained by automobile manufacturers in both territories through reduced tariffs, the removal of non-tariff barriers and the creation of increased import and export flows between both blocs.
Tariff rates for motor vehicles are currently up to 35% in Brazil and Argentina. In addition, through the deal the EU auto parts industry will gain preferential access to Mercosur-located manufacturers. Mercosur countries will also accept motor vehicles that have been certified to international UN regulations.
The EU exported almost 6.1m motor vehicles in 2018, generating a trade surplus of €84.4bn (£75.8bn).
“We applaud the efforts of the negotiators, who succeeded in concluding a well-balanced deal,” said Jonnaert. “Despite the negative climate for trade globally, this agreement shows that the European Union is willing to be ambitious and to deliver on its international trading objectives.”
Full members of Mercosur are Argentina, Brazil, Paraguay and Uruguay. Venezuela has been suspended since 2016.
Passenger car registrations across the European Union grew 2.9% year-on-year in the first half of 2018, reaching 8.4m vehicles, according to the ACEA.